Taxation of cross-border inheritances and donations (FM nr. 165) 2021/3.1.2.3:3.1.2.3 Unilateral abstention of the state of the objective nexus from taxing

Taxation of cross-border inheritances and donations (FM nr. 165) 2021/3.1.2.3

3.1.2.3 Unilateral abstention of the state of the objective nexus from taxing

Documentgegevens:

Dr. V. Dafnomilis Adv. LL.M., datum 01-02-2021

Datum: 01-02-2021
Auteur: Dr. V. Dafnomilis Adv. LL.M.
JCDI: JCDI:ADS263139:1
Vakgebied(en): Internationaal belastingrecht / Voorkoming van dubbele belasting
Schenk- en erfbelasting / Algemeen

In the same vein, one could observe that if the state of the objective nexus unilaterally abstains from levying death taxes and taxes on gifts e.g. in order to avoid double taxation, double non-taxation of the inherited or donated property is conceivable if the state of the personal nexus does not levy death taxes or taxes on gifts. One could arrive at the same conclusion if the state of the personal nexus grants an allowance/exemption/credit/deduction and therefore does not, in essence, tax the cross-border inheritance or donation at hand.1

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I note that the latter situation is called “factual double or multiple non-taxation” in the context of the OECD IHTMTC. As however, inheritance tax allowances and exemptions usually reflect the application of the windfall justification (section 2.4.2), one could take the view that this case of non-taxation should not be classified as “double or multiple non-taxation” from a legal point of view.